According to Tom DeMarks charts, Dow is on the verge of reaching his topside.
The first reason is the comparison with the bottom from June 2016. At that point, DeMarker counted 13, which ended the corrective movement. That showed, that the declining trend was tired and cannot keep the bulls from taking the upper hand. As it is seen on the charts, since then, the index is moving in an increasingly strong up trend. The second 13 came just before Dow reached 20,000. But it was a different story then. The rising movement has just began, and the bulls were benefited by the “Trump Trade”. Recently, Dow reached the projection of 22,280, where the indicator counted 13, after which it continued to count only to reach 12.
This shows that the trend is tired and the movements are not as powerful, as they were before the 20,000 mark. Most of the indices counted 13 as well, and the market hasn’t had a correction of 5% or greater for a long time. This is making investors cautious, that the bulls are running out of steam.
Another factor, which makes Tom DeMark think, that markets are reaching their top is, the comparison of DeMark’s current levels and those from the period of August – October 2011. If you invert the chart it is almost identical. That means that the trend could easily revert.
According to Tom DeMark, it is possible for a slight dip at first and then another bull run, however the potential risk is far greater than the reward.
Source: Bloomberg Pro Terminal
Jr Trader Alexander Kumanov